The Fastest Growing Trends in Car Insurance for 2024

Where our phones have become mini pocket computers, our cars are becoming computers on wheels. With more and more street smarts, automated cars can quickly sense and react to potential dangers. That could translate into fewer accidents, which may lower our insurance premiums. However, those gains may be canceled out by more costly repairs on the sophisticated technology.

Find out what 2024 may have in store for your car insurance.

1. Car insurance premiums will increase

For many drivers, cost is the most important car insurance trend because it has a direct impact on your bank account. Sadly, several studies predict your premiums will continue their upward trend. According to Insurify, auto insurance premiums will likely rise by 7% this year -- following a whopping 24% hike in 2023.

It says the average annual cost of a full-coverage policy will be $2,160 in 2024. You can blame an increase in climate events, labor shortages, supply chain issues, and inflation for the higher prices.

How you can reduce your premiums

If you're facing yet another hike in your auto insurance premiums, there are a few steps you can take. These include:

• Rate shop: Get quotes from a few different auto insurers to be sure you are getting the best deal.
• Consider a higher deductible: Your deductible is the amount you pay before your insurer steps in. According to the Insurance Information Institute, raising your deductible to $1,000 could cut your insurance cost by 40%. Just make sure you have enough cash put aside to cover the higher upfront cost.
• Bundle your insurance: See if you can get a discount by getting your home and auto insurance from the same company. For example, Liberty Mutual says you could save $950 by bundling your home and auto insurance.
• Build your credit score: One of the many benefits of having a strong credit score is that it could lower your insurance premiums. Make sure you pay your bills on time and try not to carry a high balance on your credit card. Learn more about how to increase your credit score.

2. Growth in telematics (premiums based on your driving style)

Telematics technology -- also known as usage-based insurance -- uses mobile apps or devices installed in your car. It tracks factors like how fast you go, how many miles you cover, and how hard you brake. According to a TransUnion report, the number of drivers who accepted a telematics offer increased by 33% from 2021 to 2022.

Many insurers offer an automatic discount to drivers just for signing up for telematics, with additional savings available for safer drivers. For example, Nationwide says it gives a 10% discount to customers who opt into its SmartRide program. It then gives up to 40% off based on behavior behind the wheel.

What it means for your premiums

Not only can telematics help you become a safer driver by giving feedback, it can also reduce your premiums. It's the best kind of backseat driver. If you're paying the average annual premium of $2,160, a 40% discount could mean over $860 less a year.

That said, telematics won't be for everybody. Putting privacy concerns aside, some campaign groups say it unfairly penalizes certain drivers. For example, if you regularly drive at night, this could be flagged as risky, even if you're a careful driver.

3. Rise in self-driving or autonomous vehicle capabilities

Recent years have seen huge leaps in self-driving technology, and many cars now have some form of driver support such as adaptive cruise control or lane assist. Companies like Tesla and Waymo are racing to bring fully autonomous models to the mainstream, but there are still regulatory and technical hurdles to overcome.

One of the big attractions of automated or autonomous cars is radars and sensors that can detect potential dangers. A joint study by Waymo and Swiss Re found that the technology reduced property damage claims by 76%. The impact of people using their cellphones while driving, being tired, or speeding, are all lessened by the rise of cars that can do even some of the driving.

What it means for your premiums

It isn't clear how an increase in car automation will impact your premiums. The cost benefits of a decrease in accidents could be wiped out by higher car repair and maintenance costs.

• There could be fewer claims: In theory, the whizzy sensors and crash prevention systems work could reduce the number of accidents. Plus, the technology will help to reduce fraud because there will be more monitoring and recording. That said, there's also the possibility of computer malfunction.
• Repair costs may be higher: The downside of sophisticated technology is that it won't be as easy to fix things. As Progressive points out, autonomous cars will likely need specialist repairs, which won't come cheap.
• You may not always be liable: If a car crashes while in autopilot mode, is that the fault of the car manufacturer or the person behind the wheel? Manufacturers may start to include insurance in the price of the vehicle, which could mean significant changes to the auto insurance landscape.

Key takeaway

There are some big changes taking place in auto insurance right now, many of which could impact your wallet. The Insurify survey showed that 45% of drivers hadn't taken steps to reduce their insurance costs, despite higher premiums. Consider some of the steps we highlighted above. They could save you hundreds of dollars in auto insurance and offset the ever-increasing cost of owning a car.